Applied Underwriters Unlawful Workers Compensation Insurance Programs – Class Action Investigation
Chimicles & Tikellis LLP is investigating an allegedly unlawful insurance scheme to sell workers compensation insurance carried out by a Nebraska company called Applied Underwriters (“AU”) – along with its subsidiaries. AU is a Berkshire Hathaway subsidiary that designs financial services and workers’ compensation solutions for small and midsized businesses.
Reports indicate that AU deceptively markets and sells unlawful workers’ compensation insurance programs. Specifically, AU markets and sells its “EquityComp” and “SolutionOne” workers compensation insurance programs to small and mid-sized employers as “profit sharing” plans that operate as “Retrospective Rating Plan” (RRP) policies. An RRP policy is an insurance policy where the premium charged at the beginning of the policy period is subject to change depending on the actual claims experienced during the policy period. Through an affiliated insurance company, AU sells the employer a one-year Guaranteed Cost (“GC”) policy that is filed with and approved by state insurance regulators and provides a premium that does not fluctuate based on claims experience. At the same time, however, AU requires that the employer execute a Reinsurance Participation Agreement (“RPA”) that effectively negates the GC policy. In essence, the RPA turns the employer’s workers’ compensation insurance policy into an RRP policy. Moreover, the RPA is never filed with or approved by state insurance regulators and contains onerous provisions modifying the terms of the GC policy.
Through this scheme, AU bills and collects money from employers exceeding the estimated maximum cost of the EquityComp and SolutionOne programs; refuses to explain and provide information to employers about how invoices are calculated; misrepresents to employers the anticipated total program costs; assesses significant penalties when an employer participant leaves the programs before the three-year term expires; multiplies and inflates existing claim reserve requirements to require additional payments from employers; charges premiums, costs, and fees that are not based on the participants own claims but which instead underwrite the claims of other program participants; refuses to return excessive money charged to employer participants; and requires confidential arbitration in a foreign venue if an employer participant wants to sue.
This conduct and the reported scheme being carried out by AU may be a violation of state and federal laws, including but not limited to consumer protection laws. If you are an employer and have purchased a workers compensation insurance plan from AU, please contact the lawyers listed below.